The government states it has taken an average of £150 of costs off energy bills for all families from April 2026, through changes to policy costs announced in the 2025 Autumn Budget1. Ofgem's price cap for 1 April to 30 June 2026 is set at £1,641 for a typical dual-fuel household paying by direct debit, a fall of £117, or 7%, from £1,758 in the previous quarter3. Ofgem published the updated cap levels on 25 February 20264.
The reduction is driven mainly by policy costs, which fall by £130 (55%) from £236 to £106 a year for a typical consumer4. Ofgem attributes this primarily to Budget 2025 measures: the Energy Company Obligation (ECO) and Great British Insulation Scheme (GBIS) allowances are no longer funded from energy bills, and the Renewables Obligation allowance is cut by 75%, both from 1 April 20264. Wholesale costs fall £38 (6%) to £652, while network costs rise £66 (17%) to £4634. The Welsh Government states the policy changes "together reduce average household bills by around £150"3, and the Office for National Statistics records that the government "stated that it would take an average of £150 off the cost of energy bills from April 2026 by making policy changes that would result in lowering the per-unit price"5.
Cap levels by payment method, per Ofgem4:
| Payment method | Jan to Mar 2026 | Apr to Jun 2026 | Change |
|---|---|---|---|
| Direct Debit | £1,758 | £1,641 | -£117 (-7%) |
| Standard Credit | £1,894 | £1,772 | -£122 (-6%) |
| Prepayment (PPM) | £1,711 | £1,597 | -£114 (-7%) |
| Economy 7 (Direct Debit) | £1,229 | £1,108 | -£121 (-10%) |
The Welsh Government's statement of 26 February 2026 gives the same direct debit figure of £1,641 and describes it as "a 7%, or £117 reduction from the current level of £1,758"3. It also notes that around 340,000 households in Wales, 25%, are estimated to be in fuel poverty3. The ONS reports that electricity prices fell 8.4% in April 2026, with housing and household services making the largest downward contribution to the fall in CPIH inflation, which eased to 3.0% in the 12 months to April 2026 from 3.4% in March5.
The £150 figure is a separate measure from the Warm Home Discount. The government states that around 6 million households will receive the £150 Warm Home Discount, describing a "total package of £300"1. From 1 April 2026, Ofgem states that ongoing Warm Home Discount costs are recovered through the unit rate rather than the standing charge4.
Why it matters for households
The £150 is an average across all households, not a flat credit, and it arrives through lower per-unit prices rather than a payment. A household using less energy than the typical consumption figures Ofgem uses (2,700kWh of electricity and 11,500kWh of gas a year) will see a smaller cash effect, and one using more will see a larger one4. The cap limits unit rates and standing charges on default tariffs; it is not a cap on the total bill, so what a home pays still depends on what it uses6. Households on fixed tariffs are not covered by the cap, though the ONS reports that fixed tariffs were also affected by the government's announcement6. The Welsh Government notes that 38% of customers are on fixed tariffs and that last year customers on a fixed tariff paid around £115 less on average than those on variable tariffs3.
For a home's energy independence, the change lowers the running cost of grid-supplied electricity and gas but does not alter how much energy a household generates or controls. The policy cost reduction comes from moving certain costs off bills, and the same Budget ended the ECO and GBIS insulation schemes that funded physical upgrades. Birmingham City Council states the ECO4 Flex Scheme closed to new applications and that GBIS ended on 31 March 2026, with ECO4 continuing nationally until December 2026 only so suppliers can complete outstanding remedial works7. The Welsh Government states it is investing over £120 million this year into retrofitting low-income households' homes3.
What happens next
Ofgem updates the price cap every three months6. The Welsh Government's Cabinet Secretary said she would raise supplier support with energy suppliers on 12 March 2026, and that an Ofgem pilot for lower standing charge tariffs will start this spring3. The government states it will set out more detail later this year on how consumers will be able to access low-interest loans1.
Sources8 cited
- Families to save in biggest home upgrade plan in British history - GOV.UK, gov.uk
- Warm Homes Plan (HTML) - GOV.UK, gov.uk
- Written Statement: Fuel Poverty (26 February 2026) | GOV.WALES, gov.wales
- Summary of changes to energy price cap 1 July to 30 September 2025, ofgem.gov.uk
- Consumer price inflation, UK - Office for National Statistics, ons.gov.uk
- Energy price cap explained: What it means for your bills, climateaction.gov.wales
- ECO4 Announcement, birmingham.gov.uk
- ECO4 and Great British Insulation Scheme | Getting help with your energy bills | Birmingham City Council, birmingham.gov.uk